The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

The FinancialCrisisInquiryCommission is a bipartisan commission that has been given a critical non-partisan mission — to examine the causes of the financial crisis that has gripped the country and to report our findings to the Congress, the President, and the American people.
Hopefully, the Commission's work can help rebuild the American people's belief in a financial system that puts Americans to work, fulfills their goals and provides the foundation for a new era of broadly shared prosperity.

(28 Apr 2010)
TRUEDATE CREATED = 28-04-2010
1. Goldman SachsCEOLloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
STORYLINE:
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
"Unfortunately, the housing market went south very quickly," Blankfein told sceptical senators. "So people lost money in it."
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b26ad6044e5469084381560537c68384
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

published:24 Jul 2015

views:193274

From the New York Times: According to the conclusions of a federal inquiry, the 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

published:05 Feb 2011

views:574

Elizabeth Warren Destroys Janet Yellen Over JPMor…: http://youtu.be/XYtSMLgaW6U Americans have learned a lot in recent years about how our largest financial institutions make their money. But few would have imagined that a million and a half tons of aluminum -- a quarter of the national supply at any given moment -- typically sits in a network of 27 Detroit warehouses owned by Goldman Sachs. And hardly anyone would have thought that manufacturers seeking to purchase that aluminum might wait 18 months or more for delivery, while warehouse owners like Goldman Sachs collect additional rent, paid for by consumers of aluminum products ranging from beer cans to home siding. http://www.thesoapboxroadshow.com/ WASHINGTON - Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom CoburnM.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report (PDF, 6MB) on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression.
http://levin.senate.gov/imo/media/doc/supporting/2011/PSI_WallStreetCrisis_041311.pdf

Financial crisis

The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in changes in the real economy.

Many economists have offered theories about how financial crises develop and how they could be prevented. There is no consensus, however, and financial crises continue to occur from time to time.

Types

Banking crisis

When a bank suffers a sudden rush of withdrawals by depositors, this is called a bank run. Since banks lend out most of the cash they receive in deposits (see fractional-reserve banking), it is difficult for them to quickly pay back all deposits if these are suddenly demanded, so a run renders the bank insolvent, causing customers to lose their deposits, to the extent that they are not covered by deposit insurance. An event in which bank runs are widespread is called a systemic banking crisis or banking panic.

Financial Crisis Inquiry Commission

The Financial Crisis Inquiry Commission (FCIC) is a ten-member commission appointed by the United States government with the goal of investigating the causes of the financial crisis of 2007–2010. The Commission has been nicknamed the Angelides Commission after the chairman, Phil Angelides. The Commission has been compared to the Pecora Commission, which investigated the causes of the Great Depression in the 1930s, and has been nicknamed the New Pecora Commission. Analogies have also been made to the 9/11 Commission, which examined the September 11 terrorist attacks. The Commission does have the ability to subpoena documents and witnesses for testimony, a power that the Pecora Commission had but the 9/11 Commission did not. The first public hearing of the Commission was held on January 13, 2010, with the presentation of testimony from various banking officials. Hearings continued during 2010 with "hundreds" of other persons in business, academia, and government testifying.

Crisis

A crisis (from the Greek κρίσις - krisis; plural: "crises"; adjectival form: "critical") is any event that is, or is expected to lead to, an unstable and dangerous situation affecting an individual, group, community, or whole society. Crises are deemed to be negative changes in the security, economic, political, societal, or environmental affairs, especially when they occur abruptly, with little or no warning. More loosely, it is a term meaning "a testing time" or an "emergency event".

Definition

Crisis is the situation of a complex system (family, economy, society) when the system functions poorly, an immediate decision is necessary, but the causes of the dysfunction are not known.

situation of a complex system

simple systems do not enter crises. We can speak about a crisis of moral values, an economical or political crisis, but not a motor crisis.

poor function

The system still functions, but does not break down.

an immediate decision is necessary to stop the further disintegration of the system.

Federal Reserve System

The Federal Reserve System‍—‌also known as the Federal Reserve or simply as the Fed‍—‌is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved. Events such as the Great Depression in the 1930s were major factors leading to changes in the system.

The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: maximizing employment, stabilizing prices, and moderating long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and as of 2009 also include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions. The Fed conducts research into the economy and releases numerous publications, such as the Beige Book.

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

Introduction to the Financial Crisis Inquiry Commission

The FinancialCrisisInquiryCommission is a bipartisan commission that has been given a critical non-partisan mission — to examine the causes of the financial crisis that has gripped the country and to report our findings to the Congress, the President, and the American people.
Hopefully, the Commission's work can help rebuild the American people's belief in a financial system that puts Americans to work, fulfills their goals and provides the foundation for a new era of broadly shared prosperity.

Heated exchange as CEO of investment bank testifies, protest

(28 Apr 2010)
TRUEDATE CREATED = 28-04-2010
1. Goldman SachsCEOLloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
STORYLINE:
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
"Unfortunately, the housing market went south very quickly," Blankfein told sceptical senators. "So people lost money in it."
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b26ad6044e5469084381560537c68384
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

3:56

Govt. Inquiry: Financial Crisis Was Avoidable

Govt. Inquiry: Financial Crisis Was Avoidable

Govt. Inquiry: Financial Crisis Was Avoidable

From the New York Times: According to the conclusions of a federal inquiry, the 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Elizabeth Warren Destroys Janet Yellen Over JPMor…: http://youtu.be/XYtSMLgaW6U Americans have learned a lot in recent years about how our largest financial institutions make their money. But few would have imagined that a million and a half tons of aluminum -- a quarter of the national supply at any given moment -- typically sits in a network of 27 Detroit warehouses owned by Goldman Sachs. And hardly anyone would have thought that manufacturers seeking to purchase that aluminum might wait 18 months or more for delivery, while warehouse owners like Goldman Sachs collect additional rent, paid for by consumers of aluminum products ranging from beer cans to home siding. http://www.thesoapboxroadshow.com/ WASHINGTON - Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom CoburnM.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report (PDF, 6MB) on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression.
http://levin.senate.gov/imo/media/doc/supporting/2011/PSI_WallStreetCrisis_041311.pdf

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2)

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

10:47

Financial Crisis Inquiry Commission Report - 1/3

Financial Crisis Inquiry Commission Report - 1/3

Financial Crisis Inquiry Commission Report - 1/3

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

1:17:28

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

The Dirty Big Secret Behind Buffett's Billions

America’s favorite investor loves monopoly, not free markets...
After the worst financial collapse since the Great Depression, three officials from the Financial Crisis Inquiry Commission visited Warren Buffett at his office in Omaha, Nebraska. They wanted to ask America’s most successful investor about his 24 million shares in the credit-rating agency Moody’s. The commission would later identify Moody’s and other rating agencies as “key enablers of the financial meltdown,” for granting super-safe triple-A ratings to securities that were backed by junk mortgages. Trillions of dollars’ worth of rotten financial instruments—the fuel of the crisis—“could not have been marketed and sold without [the rating agencies’] seal of approval,” the commission concluded.
Learn More:
https://www.zerohedge.com/news/2018-02-16/dirty-big-secret-behind-warren-buffetts-billions
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Greenspan, Snow hearing on financial crisis

1. Wide of Former Federal Reserve ChairmanAlan Greenspan, Securities and Exchange Commission Chairman Chris Cox and Former Treasury SecretaryJohn Snow testifying at the HouseOversight and Government Reform Committee
2. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
(SOUNDBITE STARTS OFFCAMERA)
"We are in the midst of a once-in-a-century credit tsunami. CentralBanks and governments are being required to take unprecedented measures. Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment."
3. Cutaway of Greenspan, Cox and Snow
4. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
"To avoid severe retrenchment banks and other financial intermediaries will need the support that only the substitution of sovereign credit for private credit can bestow. The 700 (b) billion troubled assets relief programme is adequate to serve that need."
5. Wide of hearing
6. SOUNDBITE: (English) Henry Waxman, Committee Chairman, Democrat California:
"Over and over again ideology trumped governance. Our regulars became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became government regulation is wrong, the market is infallible."
7. Cutaway of hearing
8. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
"Those of us who have looked at the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief. Such counter-party surveillance is a central pillar of our financial market state of balance, if it fails as had occurred this year, market stability is undermined."
9. UPSOUND: (English) Exchange between Henry Waxman, Committee Chairman, Democrat California and Alan Greenspan, Former Federal Reserve Chairman:
(HW)"You found a flaw in...the reality..."
(AG) "A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak."
(HW) "In other words, you found that your view of the world, your ideology was not right, it was not working."
(AG) "Precisely, that is precisely the reason I was shocked because I was going for 40 years or more with very considerable evidence that it was working exceptionally well."
10. Cutaway of hearing
11. UPSOUND: (English) Exchange between Henry Waxman, Committee Chairman, Democrat California and Alan Greenspan, Former Federal Reserve Chairman:
(HW) "Where do you think you made a mistake?"
(AG) "I made a mistake in presuming that the self-interest of organisations, specifically banks and others were such as that they were best capable of protecting their own shareholders and their equity in their firms."
12. Wide of Sheila Bair, Chairman of the Federal Deposit Insurance Corporation and Neel Kashkari, InterimAssistant Secretary for the US Treasury testifying at Senate Banking committee hearing
13. Mid of Bair and Kashkari
14. SOUNDBITE: (English) Sheila Bair, Chairman of the Federal Deposit Insurance Corporation ++INCLUDES CUTAWAY++:
"The FDIC is working closely and creatively with Treasury on ways to use the recent financial rescue law to create a clear framework and economic incentives to systematically modifying loans. The aim is for loan servicers to offer homeowners more affordable and sustainable mortgages."
15. Cutaway of hearing
16. SOUNDBITE:(English), Neel Kashkari, Interim Assistant Secretary for the US Treasury
"Since the announcement of our capital purchase programme we have seen numerous signs of improvements in our markets and in the confidence of our financial institutions. While there have been recent positive developments our markets remain fragile."
18. Cutaway of hearing
STORYLINE:
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/fbe0ae6ef469b35b6e24cb225061bfd0
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. housing bubble, which peaked in 2006,[5] caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[6][7] The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[8][9][10][11] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[12] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts.[13] The U.S.Senate's Levin--Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "systemic breakdown in accountability and ethics," "collapsing mortgage-lending standards and the mortgage securitization pipeline," deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk.[15] The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States.[16] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets.[17] Research into the causes of the financial crisis has also focused on the role of interest rate spreads.[18]
In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd--Frank regulatory reforms were enacted to lessen the chance of a recurrence.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308

2:54

Chairman of the Financial Crisis Inquiry Commission; Financial System Still at Risk

Chairman of the Financial Crisis Inquiry Commission; Financial System Still at Risk

Chairman of the Financial Crisis Inquiry Commission; Financial System Still at Risk

Jan. 27 (Bloomberg) -- Phil Angelides, the Democratic chairman of the Financial Crisis Inquiry Commission, talks about the group's report published today. The report blames Washington regulators and Wall Street banks equally for failures leading to the crisis. The findings weren't endorsed by the commission's four Republican members, who wrote two dissents and criticized decisions by the chairman. Angelides speaks with Peter Cook on Bloomberg Television's "InBusiness."
You can download "THE FINANCIAL CRISIS INQUIRY REPORT"
Here:
http://www.scribd.com/doc/47754964/The-Financial-Crisis-Inquiry-Report
FAIRUSE NOTICE: This video may contain copyrighted material. Such material is made available for educational purposes only. This constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright.

10:40

Financial Crisis Inquiry Commission Report - 3/3

Financial Crisis Inquiry Commission Report - 3/3

Financial Crisis Inquiry Commission Report - 3/3

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

Inquiry Doesn't Call Crisis Systemic Fraud

US financial crisis was 'avoidable'

Wall Street executives, US regulatory agencies, and the US federal reserve are all being blamed in a new report into the causes of the 2008 financial meltdown.
The country's presidential commission also concluded the financial meltdown could have been avoided altogether. But even as it wraps up its two year inquiry, the 10-member panel remains sharply divided over the causes.
The report reflects the views of six Democrats - while the four Republicans have written dissenting opinions.
It also lays much of the blame on what it says are the "reckless" practices of financial firms like Fannie Mae, AIG and Bear Stearns. It says poor controls led to excessive borrowing and risky investments on mortgages.
It also faults "weak" government regulators like the Securities and Exchange Commission and US Central Bank - for failing to rein in the banks they supervised.
Singled out is former Federal Reserve ChairmanAlan Greenspan - for backing de-regulation practies that accelerated the sub-prime mortgage crisis.
Lobbyists are also being heavily blamed.
Al Jazeera'sNick Spicer reports.

0:37

The Financial Crisis Inquiry Report, Authorized Edition Final Report of the National Commission on

The Financial Crisis Inquiry Report, Authorized Edition Final Report of the National Commission on

The Financial Crisis Inquiry Report, Authorized Edition Final Report of the National Commission on

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimat...

published: 17 Sep 2014

The 2008 Financial Crisis: Crash Course Economics #12

Today on Crash Course Economics, Adriene and Jacob talk about the 2008 financial crisis and the US Goverment's response to the troubles. So, all this starts with home mortgages, and the use of mortgages as an investment instrument. For years, it seemed like the US housing market would go up and up. Like a bubble or something. It turns out it was a bubble. But not the good kind. And the government response was...interesting. Anyway, why are you reading this? Watch the video!
More Financial Crisis Resources:
Financial Crisis InquiryReport: http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdfTAL: Giant Pool of Money: http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money
Timeline of the crisis: https://www.stlouisfed.org/financial-crisis/full-timeline
htt...

Lloyd Blankfein Question at FCIC Hearing 1/13/2010.mov

Introduction to the Financial Crisis Inquiry Commission

The FinancialCrisisInquiryCommission is a bipartisan commission that has been given a critical non-partisan mission — to examine the causes of the financial crisis that has gripped the country and to report our findings to the Congress, the President, and the American people.
Hopefully, the Commission's work can help rebuild the American people's belief in a financial system that puts Americans to work, fulfills their goals and provides the foundation for a new era of broadly shared prosperity.

Heated exchange as CEO of investment bank testifies, protest

(28 Apr 2010)
TRUEDATE CREATED = 28-04-2010
1. Goldman SachsCEOLloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) SenatorCarl...

published: 24 Jul 2015

Govt. Inquiry: Financial Crisis Was Avoidable

From the New York Times: According to the conclusions of a federal inquiry, the 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Elizabeth Warren Destroys Janet Yellen Over JPMor…: http://youtu.be/XYtSMLgaW6U Americans have learned a lot in recent years about how our largest financial institutions make their money. But few would have imagined that a million and a half tons of aluminum -- a quarter of the national supply at any given moment -- typically sits in a network of 27 Detroit warehouses owned by Goldman Sachs. And hardly anyone would have thought that manufacturers seeking to purchase that aluminum might wait 18 months or more for delivery, while warehouse owners like Goldman Sachs collect additional rent, paid for by consumers of aluminum products ranging from beer cans to home siding. http://www.thesoapboxroadshow.com/ WASHINGTON - Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mic...

Financial Crisis Inquiry Commission Report - 1/3

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angeli...

published: 11 Feb 2011

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

The Dirty Big Secret Behind Buffett's Billions

America’s favorite investor loves monopoly, not free markets...
After the worst financial collapse since the Great Depression, three officials from the Financial Crisis Inquiry Commission visited Warren Buffett at his office in Omaha, Nebraska. They wanted to ask America’s most successful investor about his 24 million shares in the credit-rating agency Moody’s. The commission would later identify Moody’s and other rating agencies as “key enablers of the financial meltdown,” for granting super-safe triple-A ratings to securities that were backed by junk mortgages. Trillions of dollars’ worth of rotten financial instruments—the fuel of the crisis—“could not have been marketed and sold without [the rating agencies’] seal of approval,” the commission concluded.
Learn More:
https://www.zerohe...

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, wh...

published: 05 Aug 2014

Chairman of the Financial Crisis Inquiry Commission; Financial System Still at Risk

Jan. 27 (Bloomberg) -- Phil Angelides, the Democratic chairman of the Financial Crisis Inquiry Commission, talks about the group's report published today. The report blames Washington regulators and Wall Street banks equally for failures leading to the crisis. The findings weren't endorsed by the commission's four Republican members, who wrote two dissents and criticized decisions by the chairman. Angelides speaks with Peter Cook on Bloomberg Television's "InBusiness."
You can download "THE FINANCIAL CRISIS INQUIRY REPORT"
Here:
http://www.scribd.com/doc/47754964/The-Financial-Crisis-Inquiry-Report
FAIRUSE NOTICE: This video may contain copyrighted material. Such material is made available for educational purposes only. This constitutes a 'fair use' of any such copyrighted material a...

published: 29 Jan 2011

Financial Crisis Inquiry Commission Report - 3/3

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angeli...

published: 11 Feb 2011

Inquiry Doesn't Call Crisis Systemic Fraud

US financial crisis was 'avoidable'

Wall Street executives, US regulatory agencies, and the US federal reserve are all being blamed in a new report into the causes of the 2008 financial meltdown.
The country's presidential commission also concluded the financial meltdown could have been avoided altogether. But even as it wraps up its two year inquiry, the 10-member panel remains sharply divided over the causes.
The report reflects the views of six Democrats - while the four Republicans have written dissenting opinions.
It also lays much of the blame on what it says are the "reckless" practices of financial firms like Fannie Mae, AIG and Bear Stearns. It says poor controls led to excessive borrowing and risky investments on mortgages.
It also faults "weak" government regulators like the Securities and Ex...

published: 27 Jan 2011

The Financial Crisis Inquiry Report, Authorized Edition Final Report of the National Commission on

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a par...

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

The FinancialCrisisInquiryCommission is a bipartisan commission that has been given a critical non-partisan mission — to examine the causes of the financial crisis that has gripped the country and to report our findings to the Congress, the President, and the American people.
Hopefully, the Commission's work can help rebuild the American people's belief in a financial system that puts Americans to work, fulfills their goals and provides the foundation for a new era of broadly shared prosperity.

The FinancialCrisisInquiryCommission is a bipartisan commission that has been given a critical non-partisan mission — to examine the causes of the financial crisis that has gripped the country and to report our findings to the Congress, the President, and the American people.
Hopefully, the Commission's work can help rebuild the American people's belief in a financial system that puts Americans to work, fulfills their goals and provides the foundation for a new era of broadly shared prosperity.

(28 Apr 2010)
TRUEDATE CREATED = 28-04-2010
1. Goldman SachsCEOLloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
STORYLINE:
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
"Unfortunately, the housing market went south very quickly," Blankfein told sceptical senators. "So people lost money in it."
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b26ad6044e5469084381560537c68384
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

(28 Apr 2010)
TRUEDATE CREATED = 28-04-2010
1. Goldman SachsCEOLloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
STORYLINE:
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
"Unfortunately, the housing market went south very quickly," Blankfein told sceptical senators. "So people lost money in it."
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b26ad6044e5469084381560537c68384
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

From the New York Times: According to the conclusions of a federal inquiry, the 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

From the New York Times: According to the conclusions of a federal inquiry, the 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Elizabeth Warren Destroys Janet Yellen Over JPMor…: http://youtu.be/XYtSMLgaW6U Americans have learned a lot in recent years about how our largest financial institutions make their money. But few would have imagined that a million and a half tons of aluminum -- a quarter of the national supply at any given moment -- typically sits in a network of 27 Detroit warehouses owned by Goldman Sachs. And hardly anyone would have thought that manufacturers seeking to purchase that aluminum might wait 18 months or more for delivery, while warehouse owners like Goldman Sachs collect additional rent, paid for by consumers of aluminum products ranging from beer cans to home siding. http://www.thesoapboxroadshow.com/ WASHINGTON - Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom CoburnM.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report (PDF, 6MB) on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression.
http://levin.senate.gov/imo/media/doc/supporting/2011/PSI_WallStreetCrisis_041311.pdf

Elizabeth Warren Destroys Janet Yellen Over JPMor…: http://youtu.be/XYtSMLgaW6U Americans have learned a lot in recent years about how our largest financial institutions make their money. But few would have imagined that a million and a half tons of aluminum -- a quarter of the national supply at any given moment -- typically sits in a network of 27 Detroit warehouses owned by Goldman Sachs. And hardly anyone would have thought that manufacturers seeking to purchase that aluminum might wait 18 months or more for delivery, while warehouse owners like Goldman Sachs collect additional rent, paid for by consumers of aluminum products ranging from beer cans to home siding. http://www.thesoapboxroadshow.com/ WASHINGTON - Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom CoburnM.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report (PDF, 6MB) on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression.
http://levin.senate.gov/imo/media/doc/supporting/2011/PSI_WallStreetCrisis_041311.pdf

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

published:11 Feb 2011

views:1006

back

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

The Dirty Big Secret Behind Buffett's Billions

America’s favorite investor loves monopoly, not free markets...
After the worst financial collapse since the Great Depression, three officials from the Financi...

America’s favorite investor loves monopoly, not free markets...
After the worst financial collapse since the Great Depression, three officials from the Financial Crisis Inquiry Commission visited Warren Buffett at his office in Omaha, Nebraska. They wanted to ask America’s most successful investor about his 24 million shares in the credit-rating agency Moody’s. The commission would later identify Moody’s and other rating agencies as “key enablers of the financial meltdown,” for granting super-safe triple-A ratings to securities that were backed by junk mortgages. Trillions of dollars’ worth of rotten financial instruments—the fuel of the crisis—“could not have been marketed and sold without [the rating agencies’] seal of approval,” the commission concluded.
Learn More:
https://www.zerohedge.com/news/2018-02-16/dirty-big-secret-behind-warren-buffetts-billions
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America’s favorite investor loves monopoly, not free markets...
After the worst financial collapse since the Great Depression, three officials from the Financial Crisis Inquiry Commission visited Warren Buffett at his office in Omaha, Nebraska. They wanted to ask America’s most successful investor about his 24 million shares in the credit-rating agency Moody’s. The commission would later identify Moody’s and other rating agencies as “key enablers of the financial meltdown,” for granting super-safe triple-A ratings to securities that were backed by junk mortgages. Trillions of dollars’ worth of rotten financial instruments—the fuel of the crisis—“could not have been marketed and sold without [the rating agencies’] seal of approval,” the commission concluded.
Learn More:
https://www.zerohedge.com/news/2018-02-16/dirty-big-secret-behind-warren-buffetts-billions
Your Support of Independent Media Is Appreciated:
Bitcoin Address- 1PxukfsHv13DbTPMwbRrXQ6wqsKQmgwQqD
Ether- 0x6cf70890e7188dac057cb0284de0f9104ed07a52
Lite Coin - Lhiaz85TyiNmCGDMaQ8DGRGETXfAvYDkTG
https://www.paypal.me/dahboo7
CryptoKings Telegram- https://t.me/CryptoKings7
Get Free Crypto CoinsDaily, No strings Attached!
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1. Wide of Former Federal Reserve ChairmanAlan Greenspan, Securities and Exchange Commission Chairman Chris Cox and Former Treasury SecretaryJohn Snow testifying at the HouseOversight and Government Reform Committee
2. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
(SOUNDBITE STARTS OFFCAMERA)
"We are in the midst of a once-in-a-century credit tsunami. CentralBanks and governments are being required to take unprecedented measures. Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment."
3. Cutaway of Greenspan, Cox and Snow
4. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
"To avoid severe retrenchment banks and other financial intermediaries will need the support that only the substitution of sovereign credit for private credit can bestow. The 700 (b) billion troubled assets relief programme is adequate to serve that need."
5. Wide of hearing
6. SOUNDBITE: (English) Henry Waxman, Committee Chairman, Democrat California:
"Over and over again ideology trumped governance. Our regulars became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became government regulation is wrong, the market is infallible."
7. Cutaway of hearing
8. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
"Those of us who have looked at the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief. Such counter-party surveillance is a central pillar of our financial market state of balance, if it fails as had occurred this year, market stability is undermined."
9. UPSOUND: (English) Exchange between Henry Waxman, Committee Chairman, Democrat California and Alan Greenspan, Former Federal Reserve Chairman:
(HW)"You found a flaw in...the reality..."
(AG) "A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak."
(HW) "In other words, you found that your view of the world, your ideology was not right, it was not working."
(AG) "Precisely, that is precisely the reason I was shocked because I was going for 40 years or more with very considerable evidence that it was working exceptionally well."
10. Cutaway of hearing
11. UPSOUND: (English) Exchange between Henry Waxman, Committee Chairman, Democrat California and Alan Greenspan, Former Federal Reserve Chairman:
(HW) "Where do you think you made a mistake?"
(AG) "I made a mistake in presuming that the self-interest of organisations, specifically banks and others were such as that they were best capable of protecting their own shareholders and their equity in their firms."
12. Wide of Sheila Bair, Chairman of the Federal Deposit Insurance Corporation and Neel Kashkari, InterimAssistant Secretary for the US Treasury testifying at Senate Banking committee hearing
13. Mid of Bair and Kashkari
14. SOUNDBITE: (English) Sheila Bair, Chairman of the Federal Deposit Insurance Corporation ++INCLUDES CUTAWAY++:
"The FDIC is working closely and creatively with Treasury on ways to use the recent financial rescue law to create a clear framework and economic incentives to systematically modifying loans. The aim is for loan servicers to offer homeowners more affordable and sustainable mortgages."
15. Cutaway of hearing
16. SOUNDBITE:(English), Neel Kashkari, Interim Assistant Secretary for the US Treasury
"Since the announcement of our capital purchase programme we have seen numerous signs of improvements in our markets and in the confidence of our financial institutions. While there have been recent positive developments our markets remain fragile."
18. Cutaway of hearing
STORYLINE:
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/fbe0ae6ef469b35b6e24cb225061bfd0
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

1. Wide of Former Federal Reserve ChairmanAlan Greenspan, Securities and Exchange Commission Chairman Chris Cox and Former Treasury SecretaryJohn Snow testifying at the HouseOversight and Government Reform Committee
2. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
(SOUNDBITE STARTS OFFCAMERA)
"We are in the midst of a once-in-a-century credit tsunami. CentralBanks and governments are being required to take unprecedented measures. Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment."
3. Cutaway of Greenspan, Cox and Snow
4. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
"To avoid severe retrenchment banks and other financial intermediaries will need the support that only the substitution of sovereign credit for private credit can bestow. The 700 (b) billion troubled assets relief programme is adequate to serve that need."
5. Wide of hearing
6. SOUNDBITE: (English) Henry Waxman, Committee Chairman, Democrat California:
"Over and over again ideology trumped governance. Our regulars became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became government regulation is wrong, the market is infallible."
7. Cutaway of hearing
8. SOUNDBITE: (English) Alan Greenspan, Former Federal Reserve Chairman:
"Those of us who have looked at the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief. Such counter-party surveillance is a central pillar of our financial market state of balance, if it fails as had occurred this year, market stability is undermined."
9. UPSOUND: (English) Exchange between Henry Waxman, Committee Chairman, Democrat California and Alan Greenspan, Former Federal Reserve Chairman:
(HW)"You found a flaw in...the reality..."
(AG) "A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak."
(HW) "In other words, you found that your view of the world, your ideology was not right, it was not working."
(AG) "Precisely, that is precisely the reason I was shocked because I was going for 40 years or more with very considerable evidence that it was working exceptionally well."
10. Cutaway of hearing
11. UPSOUND: (English) Exchange between Henry Waxman, Committee Chairman, Democrat California and Alan Greenspan, Former Federal Reserve Chairman:
(HW) "Where do you think you made a mistake?"
(AG) "I made a mistake in presuming that the self-interest of organisations, specifically banks and others were such as that they were best capable of protecting their own shareholders and their equity in their firms."
12. Wide of Sheila Bair, Chairman of the Federal Deposit Insurance Corporation and Neel Kashkari, InterimAssistant Secretary for the US Treasury testifying at Senate Banking committee hearing
13. Mid of Bair and Kashkari
14. SOUNDBITE: (English) Sheila Bair, Chairman of the Federal Deposit Insurance Corporation ++INCLUDES CUTAWAY++:
"The FDIC is working closely and creatively with Treasury on ways to use the recent financial rescue law to create a clear framework and economic incentives to systematically modifying loans. The aim is for loan servicers to offer homeowners more affordable and sustainable mortgages."
15. Cutaway of hearing
16. SOUNDBITE:(English), Neel Kashkari, Interim Assistant Secretary for the US Treasury
"Since the announcement of our capital purchase programme we have seen numerous signs of improvements in our markets and in the confidence of our financial institutions. While there have been recent positive developments our markets remain fragile."
18. Cutaway of hearing
STORYLINE:
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/fbe0ae6ef469b35b6e24cb225061bfd0
Find out more about AP Archive: http://www.aparchive.com/HowWeWork

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. housing bubble, which peaked in 2006,[5] caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[6][7] The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[8][9][10][11] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[12] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts.[13] The U.S.Senate's Levin--Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "systemic breakdown in accountability and ethics," "collapsing mortgage-lending standards and the mortgage securitization pipeline," deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk.[15] The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States.[16] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets.[17] Research into the causes of the financial crisis has also focused on the role of interest rate spreads.[18]
In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd--Frank regulatory reforms were enacted to lessen the chance of a recurrence.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. housing bubble, which peaked in 2006,[5] caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[6][7] The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[8][9][10][11] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[12] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts.[13] The U.S.Senate's Levin--Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "systemic breakdown in accountability and ethics," "collapsing mortgage-lending standards and the mortgage securitization pipeline," deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk.[15] The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States.[16] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets.[17] Research into the causes of the financial crisis has also focused on the role of interest rate spreads.[18]
In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd--Frank regulatory reforms were enacted to lessen the chance of a recurrence.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308

published:05 Aug 2014

views:2443

back

Chairman of the Financial Crisis Inquiry Commission; Financial System Still at Risk

Jan. 27 (Bloomberg) -- Phil Angelides, the Democratic chairman of the Financial Crisis Inquiry Commission, talks about the group's report published today. The report blames Washington regulators and Wall Street banks equally for failures leading to the crisis. The findings weren't endorsed by the commission's four Republican members, who wrote two dissents and criticized decisions by the chairman. Angelides speaks with Peter Cook on Bloomberg Television's "InBusiness."
You can download "THE FINANCIAL CRISIS INQUIRY REPORT"
Here:
http://www.scribd.com/doc/47754964/The-Financial-Crisis-Inquiry-Report
FAIRUSE NOTICE: This video may contain copyrighted material. Such material is made available for educational purposes only. This constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright.

Jan. 27 (Bloomberg) -- Phil Angelides, the Democratic chairman of the Financial Crisis Inquiry Commission, talks about the group's report published today. The report blames Washington regulators and Wall Street banks equally for failures leading to the crisis. The findings weren't endorsed by the commission's four Republican members, who wrote two dissents and criticized decisions by the chairman. Angelides speaks with Peter Cook on Bloomberg Television's "InBusiness."
You can download "THE FINANCIAL CRISIS INQUIRY REPORT"
Here:
http://www.scribd.com/doc/47754964/The-Financial-Crisis-Inquiry-Report
FAIRUSE NOTICE: This video may contain copyrighted material. Such material is made available for educational purposes only. This constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright.

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

US financial crisis was 'avoidable'

Wall Street executives, US regulatory agencies, and the US federal reserve are all being blamed in a new report into the causes of the 2008 financial meltdown.
...

Wall Street executives, US regulatory agencies, and the US federal reserve are all being blamed in a new report into the causes of the 2008 financial meltdown.
The country's presidential commission also concluded the financial meltdown could have been avoided altogether. But even as it wraps up its two year inquiry, the 10-member panel remains sharply divided over the causes.
The report reflects the views of six Democrats - while the four Republicans have written dissenting opinions.
It also lays much of the blame on what it says are the "reckless" practices of financial firms like Fannie Mae, AIG and Bear Stearns. It says poor controls led to excessive borrowing and risky investments on mortgages.
It also faults "weak" government regulators like the Securities and Exchange Commission and US Central Bank - for failing to rein in the banks they supervised.
Singled out is former Federal Reserve ChairmanAlan Greenspan - for backing de-regulation practies that accelerated the sub-prime mortgage crisis.
Lobbyists are also being heavily blamed.
Al Jazeera'sNick Spicer reports.

Wall Street executives, US regulatory agencies, and the US federal reserve are all being blamed in a new report into the causes of the 2008 financial meltdown.
The country's presidential commission also concluded the financial meltdown could have been avoided altogether. But even as it wraps up its two year inquiry, the 10-member panel remains sharply divided over the causes.
The report reflects the views of six Democrats - while the four Republicans have written dissenting opinions.
It also lays much of the blame on what it says are the "reckless" practices of financial firms like Fannie Mae, AIG and Bear Stearns. It says poor controls led to excessive borrowing and risky investments on mortgages.
It also faults "weak" government regulators like the Securities and Exchange Commission and US Central Bank - for failing to rein in the banks they supervised.
Singled out is former Federal Reserve ChairmanAlan Greenspan - for backing de-regulation practies that accelerated the sub-prime mortgage crisis.
Lobbyists are also being heavily blamed.
Al Jazeera'sNick Spicer reports.

published:27 Jan 2011

views:3710

back

The Financial Crisis Inquiry Report, Authorized Edition Final Report of the National Commission on

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimat...

published: 17 Sep 2014

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

Peter Wallison's Dissent from the Majority Report of the Financial Crisis Inquiry Commission

Find out more at http://www.aei.org/Wallison
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AEI operates independently of any political party and does not take institutional positions on any issues. AEI scholars, fellows, and their guests frequently take positions on policy and other issues. When...

A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings. More on Buffett: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=22f3a19f1003df6e04ad734879f32fb7&camp=1789&creative=9325&index=books&keywords=warren%20buffett
In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), a...

published: 11 Jun 2013

Warren Buffett on Financial Audits, Corporate Boards, and U.S. Business Regulation (2007)

In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership. Buffett invested in and eventually took control of a textile manufacturing firm, Berkshire Hathaway. In 1962, Warren Buffett began buying shares in Berkshire from Seabury Stanton, the owner, whom he later fired. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and na...

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, wh...

published: 05 Aug 2014

Global Financial Meltdown

Youtube: https://www.youtube.com/watch?v=bFjPM53yafk
You have a vote - use it wisely, whoever you think who deserves your trust - BUT USE IT!
Financial crisis of 2007–08The financial crisis of 2007–08, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.
It threatened the collapse of large financial institutions, which was prevented by the bailout of banks by national governments, but stock markets still dropped worldwide. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillion...

The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2008. About the book: https://www.amazon.com/gp/product/0812983637/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0812983637&linkCode=as2&tag=tra0c7-20&linkId=31b3fb4dc3832e2d19a7f4f1e8785a44
It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.
Government housing policies, over-regulation, failed regulation and deregulation have all been claimed as causes of th...

Financial Crisis 2008|Us Financial Crisis|2008 Crisis

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The 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.
The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans. Financial crisis 2008
"The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done," the panel wrote in ...

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a par...

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

published:17 Sep 2014

views:50882

back

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

Peter Wallison's Dissent from the Majority Report of the Financial Crisis Inquiry Commission

Find out more at http://www.aei.org/Wallison
Third-party photos, graphics, and video clips in this video may have been cropped or reframed. Music in this video...

Find out more at http://www.aei.org/Wallison
Third-party photos, graphics, and video clips in this video may have been cropped or reframed. Music in this video may have been recut from its original arrangement and timing.
In the event this video uses Creative Commons assets: If not noted in the description, titles for Creative Commons assets used in this video can be found at the link provided after each asset.
The use of third-party photos, graphics, video clips, and/or music in this video does not constitute an endorsement from the artists and producers licensing those materials.
AEI operates independently of any political party and does not take institutional positions on any issues. AEI scholars, fellows, and their guests frequently take positions on policy and other issues. When they do, they speak for themselves and not for AEI or its trustees or other scholars or employees.
More information on AEI research integrity can be found here: http://www.aei.org/about/
#news #politics #government #education

Find out more at http://www.aei.org/Wallison
Third-party photos, graphics, and video clips in this video may have been cropped or reframed. Music in this video may have been recut from its original arrangement and timing.
In the event this video uses Creative Commons assets: If not noted in the description, titles for Creative Commons assets used in this video can be found at the link provided after each asset.
The use of third-party photos, graphics, video clips, and/or music in this video does not constitute an endorsement from the artists and producers licensing those materials.
AEI operates independently of any political party and does not take institutional positions on any issues. AEI scholars, fellows, and their guests frequently take positions on policy and other issues. When they do, they speak for themselves and not for AEI or its trustees or other scholars or employees.
More information on AEI research integrity can be found here: http://www.aei.org/about/
#news #politics #government #education

A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselve...

A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings. More on Buffett: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=22f3a19f1003df6e04ad734879f32fb7&camp=1789&creative=9325&index=books&keywords=warren%20buffett
In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued.
The value of such security ratings has been widely questioned after the 2007--09 financial crisis. In 2003, the U.S.Securities and Exchange Commission submitted a report to Congress detailing plans to launch an investigation into the anti-competitive practices of credit rating agencies and issues including conflicts of interest. More recently, ratings downgrades during the European sovereign debt crisis of 2010--11 have drawn criticism from the EU and individual countries.
A company that issues credit scores for individual credit-worthiness is generally called a credit bureau (US) or consumer credit reporting agency (UK).
Credit rating agencies have been subject to the following criticisms:
Credit rating agencies do not downgrade companies promptly enough. For example, Enron's rating remained at investment grade four days before the company went bankrupt, despite the fact that credit rating agencies had been aware of the company's problems for months. Or, for example, Moody's gave Freddie Mac's preferred stock the top rating until Warren Buffett talked about Freddie on CNBC and on the next day Moody's downgraded Freddie to one tick above junk bonds. Some empirical studies have documented that yield spreads of corporate bonds start to expand as credit quality deteriorates but before a rating downgrade, implying that the market often leads a downgrade and questioning the informational value of credit ratings. This has led to suggestions that, rather than rely on CRA ratings in financial regulation, financial regulators should instead require banks, broker-dealers and insurance firms (among others) to use credit spreads when calculating the risk in their portfolio.
Large corporate rating agencies have been criticized for having too familiar a relationship with company management, possibly opening themselves to undue influence or the vulnerability of being misled. These agencies meet frequently in person with the management of many companies, and advise on actions the company should take to maintain a certain rating. Furthermore, because information about ratings changes from the larger CRAs can spread so quickly (by word of mouth, email, etc.), the larger CRAs charge debt issuers, rather than investors, for their ratings. This has led to accusations that these CRAs are plagued by conflicts of interest that might inhibit them from providing accurate and honest ratings. At the same time, more generally, the largest agencies (Moody's and Standard & Poor's) are often seen as promoting a narrow-minded focus on credit ratings, possibly at the expense of employees, the environment, or long-term research and development. These accusations are not entirely consistent: on one hand, the larger CRAs are accused of being too cozy with the companies they rate, and on the other hand they are accused of being too focused on a company's "bottom line" and unwilling to listen to a company's explanations for its actions.
While often accused of being too close to company management of their existing clients, CRAs have also been accused of engaging in heavy-handed "blackmail" tactics in order to solicit business from new clients, and lowering ratings for those firms . For instance, Moody's published an "unsolicited" rating of Hannover Re, with a subsequent letter to the insurance firm indicating that "it looked forward to the day Hannover would be willing to pay". When Hannover management refused, Moody's continued to give Hannover Re ratings, which were downgraded over successive years, all while making payment requests that the insurer rebuffed. In 2004, Moody's cut Hannover's debt to junk status, and even though the insurer's other rating agencies gave it strong marks, shareholders were shocked by the downgrade and Hannover lost $175 million USD in market capitalization.
http://en.wikipedia.org/wiki/Credit_rating_agency

A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings. More on Buffett: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=22f3a19f1003df6e04ad734879f32fb7&camp=1789&creative=9325&index=books&keywords=warren%20buffett
In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued.
The value of such security ratings has been widely questioned after the 2007--09 financial crisis. In 2003, the U.S.Securities and Exchange Commission submitted a report to Congress detailing plans to launch an investigation into the anti-competitive practices of credit rating agencies and issues including conflicts of interest. More recently, ratings downgrades during the European sovereign debt crisis of 2010--11 have drawn criticism from the EU and individual countries.
A company that issues credit scores for individual credit-worthiness is generally called a credit bureau (US) or consumer credit reporting agency (UK).
Credit rating agencies have been subject to the following criticisms:
Credit rating agencies do not downgrade companies promptly enough. For example, Enron's rating remained at investment grade four days before the company went bankrupt, despite the fact that credit rating agencies had been aware of the company's problems for months. Or, for example, Moody's gave Freddie Mac's preferred stock the top rating until Warren Buffett talked about Freddie on CNBC and on the next day Moody's downgraded Freddie to one tick above junk bonds. Some empirical studies have documented that yield spreads of corporate bonds start to expand as credit quality deteriorates but before a rating downgrade, implying that the market often leads a downgrade and questioning the informational value of credit ratings. This has led to suggestions that, rather than rely on CRA ratings in financial regulation, financial regulators should instead require banks, broker-dealers and insurance firms (among others) to use credit spreads when calculating the risk in their portfolio.
Large corporate rating agencies have been criticized for having too familiar a relationship with company management, possibly opening themselves to undue influence or the vulnerability of being misled. These agencies meet frequently in person with the management of many companies, and advise on actions the company should take to maintain a certain rating. Furthermore, because information about ratings changes from the larger CRAs can spread so quickly (by word of mouth, email, etc.), the larger CRAs charge debt issuers, rather than investors, for their ratings. This has led to accusations that these CRAs are plagued by conflicts of interest that might inhibit them from providing accurate and honest ratings. At the same time, more generally, the largest agencies (Moody's and Standard & Poor's) are often seen as promoting a narrow-minded focus on credit ratings, possibly at the expense of employees, the environment, or long-term research and development. These accusations are not entirely consistent: on one hand, the larger CRAs are accused of being too cozy with the companies they rate, and on the other hand they are accused of being too focused on a company's "bottom line" and unwilling to listen to a company's explanations for its actions.
While often accused of being too close to company management of their existing clients, CRAs have also been accused of engaging in heavy-handed "blackmail" tactics in order to solicit business from new clients, and lowering ratings for those firms . For instance, Moody's published an "unsolicited" rating of Hannover Re, with a subsequent letter to the insurance firm indicating that "it looked forward to the day Hannover would be willing to pay". When Hannover management refused, Moody's continued to give Hannover Re ratings, which were downgraded over successive years, all while making payment requests that the insurer rebuffed. In 2004, Moody's cut Hannover's debt to junk status, and even though the insurer's other rating agencies gave it strong marks, shareholders were shocked by the downgrade and Hannover lost $175 million USD in market capitalization.
http://en.wikipedia.org/wiki/Credit_rating_agency

published:11 Jun 2013

views:11054

back

Warren Buffett on Financial Audits, Corporate Boards, and U.S. Business Regulation (2007)

In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffe...

In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership. Buffett invested in and eventually took control of a textile manufacturing firm, Berkshire Hathaway. In 1962, Warren Buffett began buying shares in Berkshire from Seabury Stanton, the owner, whom he later fired. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chace, to run the company. In 1966, Buffett closed the partnership to new money. He would go on to claim that the textile business had been his worst trade.[29] He then moved the business into the insurance sector, and in 1985 the last of the mills that had been the core business of Berkshire Hathaway was sold. Buffett wrote in his letter: "... unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL."
In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its first and only dividend of 10 cents. In 1969, following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters to shareholders. However, he lived solely on his salary of $50,000 per year, and his outside investment income. In 1979, Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors. In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were brought. In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost money, until the Courier-Express folded in 1982.
In 1979, Berkshire began to acquire stock in ABC. Capital Cities announced $3.5 billion purchase of ABC on March 18, 1985 surprised the media industry, as ABC was four times bigger than Capital Cities at the time. Berkshire Hathaway chairman Warren Buffett helped finance the deal in return for a 25% stake in the combined company.[30] The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Also, the two companies owned several radio stations in the same markets.[31]
In 1987, Berkshire Hathaway purchased a 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director. In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991.[32] Buffett became Chairman of Salomon until the crisis passed; on September 4, 1991, he testified before Congress.[33]
In 1988, Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7% of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which it still holds.
http://en.wikipedia.org/wiki/Warren_Buffett

In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership. Buffett invested in and eventually took control of a textile manufacturing firm, Berkshire Hathaway. In 1962, Warren Buffett began buying shares in Berkshire from Seabury Stanton, the owner, whom he later fired. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chace, to run the company. In 1966, Buffett closed the partnership to new money. He would go on to claim that the textile business had been his worst trade.[29] He then moved the business into the insurance sector, and in 1985 the last of the mills that had been the core business of Berkshire Hathaway was sold. Buffett wrote in his letter: "... unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL."
In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its first and only dividend of 10 cents. In 1969, following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters to shareholders. However, he lived solely on his salary of $50,000 per year, and his outside investment income. In 1979, Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors. In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were brought. In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost money, until the Courier-Express folded in 1982.
In 1979, Berkshire began to acquire stock in ABC. Capital Cities announced $3.5 billion purchase of ABC on March 18, 1985 surprised the media industry, as ABC was four times bigger than Capital Cities at the time. Berkshire Hathaway chairman Warren Buffett helped finance the deal in return for a 25% stake in the combined company.[30] The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Also, the two companies owned several radio stations in the same markets.[31]
In 1987, Berkshire Hathaway purchased a 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director. In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991.[32] Buffett became Chairman of Salomon until the crisis passed; on September 4, 1991, he testified before Congress.[33]
In 1988, Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7% of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which it still holds.
http://en.wikipedia.org/wiki/Warren_Buffett

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. housing bubble, which peaked in 2006,[5] caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[6][7] The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[8][9][10][11] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[12] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts.[13] The U.S.Senate's Levin--Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "systemic breakdown in accountability and ethics," "collapsing mortgage-lending standards and the mortgage securitization pipeline," deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk.[15] The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States.[16] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets.[17] Research into the causes of the financial crisis has also focused on the role of interest rate spreads.[18]
In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd--Frank regulatory reforms were enacted to lessen the chance of a recurrence.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. housing bubble, which peaked in 2006,[5] caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[6][7] The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[8][9][10][11] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[12] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts.[13] The U.S.Senate's Levin--Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "systemic breakdown in accountability and ethics," "collapsing mortgage-lending standards and the mortgage securitization pipeline," deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk.[15] The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States.[16] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets.[17] Research into the causes of the financial crisis has also focused on the role of interest rate spreads.[18]
In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd--Frank regulatory reforms were enacted to lessen the chance of a recurrence.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308

Global Financial Meltdown

Youtube: https://www.youtube.com/watch?v=bFjPM53yafk
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Financial crisis...

Youtube: https://www.youtube.com/watch?v=bFjPM53yafk
You have a vote - use it wisely, whoever you think who deserves your trust - BUT USE IT!
Financial crisis of 2007–08The financial crisis of 2007–08, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.
It threatened the collapse of large financial institutions, which was prevented by the bailout of banks by national governments, but stock markets still dropped worldwide. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the Great Recession of 2008–2012 and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. (United States) housing bubble, which peaked in 2004, caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally. The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for subprime borrowers, overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making. Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined. Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts. The U.S.Senate's Levin–Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street." The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision", "dramatic failures of corporate governance and risk management at many systemically important financial institutions", "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic", a "systemic breakdown in accountability and ethics", "collapsing mortgage-lending standards and the mortgage securitization pipeline", deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk. The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets. Research into the causes of the financial crisis has also focused on the role of interest rate spreads.
Wikipedia: https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
Wikipedia: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis
Wikipedia: https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_in_the_United_States_during_the_2007%E2%80%9312_global_financial_crisis
WIkipedia: https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present)
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You have a vote - use it wisely, whoever you think who deserves your trust - BUT USE IT!
Financial crisis of 2007–08The financial crisis of 2007–08, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.
It threatened the collapse of large financial institutions, which was prevented by the bailout of banks by national governments, but stock markets still dropped worldwide. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the Great Recession of 2008–2012 and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. (United States) housing bubble, which peaked in 2004, caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally. The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for subprime borrowers, overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making. Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined. Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts. The U.S.Senate's Levin–Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street." The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision", "dramatic failures of corporate governance and risk management at many systemically important financial institutions", "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic", a "systemic breakdown in accountability and ethics", "collapsing mortgage-lending standards and the mortgage securitization pipeline", deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk. The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets. Research into the causes of the financial crisis has also focused on the role of interest rate spreads.
Wikipedia: https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
Wikipedia: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis
Wikipedia: https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_in_the_United_States_during_the_2007%E2%80%9312_global_financial_crisis
WIkipedia: https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present)
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The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2008. About the book:...

The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2008. About the book: https://www.amazon.com/gp/product/0812983637/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0812983637&linkCode=as2&tag=tra0c7-20&linkId=31b3fb4dc3832e2d19a7f4f1e8785a44
It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.
Government housing policies, over-regulation, failed regulation and deregulation have all been claimed as causes of the crisis, along with many others. While the modern financial system evolved, regulation did not keep pace and became mismatched with the risks building in the economy. The FinancialCrisisInquiryCommission (FCIC) tasked with investigating the causes of the crisis reported in January 2011 that: "We had a 21st-century financial system with 19th-century safeguards."[1]
Increasing home ownership has been the goal of several presidents including Roosevelt, Reagan, Clinton and George W. Bush.[2] However, the FCIC wrote that Fannie Mae and Freddie Mac, government affordable housing policies, and the Community Reinvestment Act were not primary causes of the crisis.[1][3]
Failure to regulate the non-depository banking system (also called the shadow banking system) has also been blamed.[1][4] The non-depository system grew to exceed the size of the regulated depository banking system,[5] but the investment banks, insurers, hedge funds, and money market funds were not subject to the same regulations. Many of these institutions suffered the equivalent of a bank run,[6] with the notable collapses of Lehman Brothers and AIG during September 2008 precipitating a financial crisis and subsequent recession.[7]
The government also repealed or implemented several laws that limited the regulation of the banking industry, such as the repeal of the Glass-Steagall Act and implementation of the CommodityFuturesModernization Act of 2000. The former allowed depository and investment banks to merge while the latter limited the regulation of financial derivatives.
http://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis
Incarceration in the United States is one of the main forms of punishment, rehabilitation, or both for the commission of felony and other offenses. The United States has the largest prison population in the world,[3][4] and the second-highest per-capita incarceration rate, behind Seychelles (which has a total prison population of 786 out of a population of 90,024).[5][6] In 2012, it was 707 adults incarcerated per 100,000 population.
According to the U.S.Bureau of Justice Statistics (BJS), 2,266,800 adults were incarcerated in U.S. federal and state prisons, and county jails at year-end 2011 – about 0.94% of adults in the U.S. resident population.[8] Additionally, 4,814,200 adults at year-end 2011 were on probation or on parole.[12] In total, 6,977,700 adults were under correctional supervision (probation, parole, jail, or prison) in 2011 – about 2.9% of adults in the U.S. resident population.[12]
In addition, there were 70,792 juveniles in juvenile detention in 2010.[13]
Although debtor's prisons no longer exist in the United States, residents of some U.S. states can still be incarcerated for debt as of 2014.[14][15][16][17] The Vera Institute of Justice reported in 2015 that jails throughout the United States have become warehouses for the poor, the mentally ill and those suffering from addiction as such individuals lack the financial means or mental capacity to post bail.[18]
According to a 2014 report by Human Rights Watch, "tough-on-crime" laws adopted since the 1980s have filled U.S. prisons with mostly nonviolent offenders.[19] This policy failed to rehabilitate prisoners and many were worse on release than before incarceration. Rehabilitation programs for offenders can be more cost effective than prison.[20] According to the Brennan Center for Justice, falling crime rates cannot be ascribed to mass incarceration.
http://en.wikipedia.org/wiki/Incarceration_in_the_United_States

The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2008. About the book: https://www.amazon.com/gp/product/0812983637/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0812983637&linkCode=as2&tag=tra0c7-20&linkId=31b3fb4dc3832e2d19a7f4f1e8785a44
It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.
Government housing policies, over-regulation, failed regulation and deregulation have all been claimed as causes of the crisis, along with many others. While the modern financial system evolved, regulation did not keep pace and became mismatched with the risks building in the economy. The FinancialCrisisInquiryCommission (FCIC) tasked with investigating the causes of the crisis reported in January 2011 that: "We had a 21st-century financial system with 19th-century safeguards."[1]
Increasing home ownership has been the goal of several presidents including Roosevelt, Reagan, Clinton and George W. Bush.[2] However, the FCIC wrote that Fannie Mae and Freddie Mac, government affordable housing policies, and the Community Reinvestment Act were not primary causes of the crisis.[1][3]
Failure to regulate the non-depository banking system (also called the shadow banking system) has also been blamed.[1][4] The non-depository system grew to exceed the size of the regulated depository banking system,[5] but the investment banks, insurers, hedge funds, and money market funds were not subject to the same regulations. Many of these institutions suffered the equivalent of a bank run,[6] with the notable collapses of Lehman Brothers and AIG during September 2008 precipitating a financial crisis and subsequent recession.[7]
The government also repealed or implemented several laws that limited the regulation of the banking industry, such as the repeal of the Glass-Steagall Act and implementation of the CommodityFuturesModernization Act of 2000. The former allowed depository and investment banks to merge while the latter limited the regulation of financial derivatives.
http://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis
Incarceration in the United States is one of the main forms of punishment, rehabilitation, or both for the commission of felony and other offenses. The United States has the largest prison population in the world,[3][4] and the second-highest per-capita incarceration rate, behind Seychelles (which has a total prison population of 786 out of a population of 90,024).[5][6] In 2012, it was 707 adults incarcerated per 100,000 population.
According to the U.S.Bureau of Justice Statistics (BJS), 2,266,800 adults were incarcerated in U.S. federal and state prisons, and county jails at year-end 2011 – about 0.94% of adults in the U.S. resident population.[8] Additionally, 4,814,200 adults at year-end 2011 were on probation or on parole.[12] In total, 6,977,700 adults were under correctional supervision (probation, parole, jail, or prison) in 2011 – about 2.9% of adults in the U.S. resident population.[12]
In addition, there were 70,792 juveniles in juvenile detention in 2010.[13]
Although debtor's prisons no longer exist in the United States, residents of some U.S. states can still be incarcerated for debt as of 2014.[14][15][16][17] The Vera Institute of Justice reported in 2015 that jails throughout the United States have become warehouses for the poor, the mentally ill and those suffering from addiction as such individuals lack the financial means or mental capacity to post bail.[18]
According to a 2014 report by Human Rights Watch, "tough-on-crime" laws adopted since the 1980s have filled U.S. prisons with mostly nonviolent offenders.[19] This policy failed to rehabilitate prisoners and many were worse on release than before incarceration. Rehabilitation programs for offenders can be more cost effective than prison.[20] According to the Brennan Center for Justice, falling crime rates cannot be ascribed to mass incarceration.
http://en.wikipedia.org/wiki/Incarceration_in_the_United_States

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The 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.
The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans. Financial crisis 2008
"The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done," the panel wrote in the report's conclusions, which were read by The New York Times. "If we accept this notion, it will happen again."
While the panel, the Financial Crisis Inquiry Commission, accuses several financial institutions of greed, ineptitude or both, some of its gravest conclusions concern government failings, with embarrassing implications for both parties. But the panel was itself divided along partisan lines, which could blunt the impact of its findings. Financial crisis 2008
Many of the conclusions have been widely described, but the synthesis of interviews, documents and testimony, along with its government imprimatur, give the report — to be released on Thursday as a 576-page book — a conclusive sweep and authority.
The commission held 19 days of hearings and interviews with more than 700 witnesses; it has pledged to release a trove of transcripts and other raw material online.
Of the 10 commission members, the six appointed by Democrats endorsed the final report. Three Republican members have prepared a dissent focusing on a narrower set of causes; a fourth Republican, Peter J. Wallison, has his own dissent, calling policies to promote homeownership the major culprit. The panel was hobbled repeatedly by internal divisions and staff turnover.
The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke, who did not foresee the crisis but played a crucial role in the response. It criticizes Mr. Greenspan for advocating deregulation and cites a "pivotal failure to stem the flow of toxic mortgages" under his leadership as a "prime example" of negligence.
Like Mr. Bernanke, Mr. Bush'sTreasury secretary, Henry M. Paulson Jr., predicted in 2007 — wrongly, it turned out — that the subprime collapse would be contained, the report notes.
Democrats also come under fire. The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton's term, is called "a key turning point in the march toward the financial crisis 2008."
Former and current officials named in the report, as well as financial institutions, declined Tuesday to comment before the report was released.
The report could reignite debate over the influence of Wall Street; it says regulators "lacked the political will" to scrutinize and hold accountable the institutions they were supposed to oversee. The financial industry spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with it made more than $1 billion in campaign contributions.
The report does knock down — at least partly — several early theories for the financial crisis. It says the low interest rates brought about by the Fed after the 2001 recession; Fannie Mae and Freddie Mac, the mortgage finance giants; and the "aggressive homeownership goals" set by the government as part of a "philosophy of opportunity" were not major culprits.
"The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire," the report states. "The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble." Financial crisis 2008
The report's implications may be felt more in the political realm than in public policy. The Dodd-Frank law overhauling the regulation of Wall Street, signed in July, took as its premise the same regulatory deficiencies cited by the commission. But the report is sure to be a factor in the debate over the future of Fannie and Freddie, which have been run by the government since 2008.
Though the report documents questionable practices by mortgage lenders and careless betting by banks, one striking finding is its portrayal of incompetence.
Financial crisis 2008 us financial crisis,us economy,economic news,financial crisis 2008,2008 financial crisis,subprime crisis,economic depression,american economy,subprime mortgage crisis,s 2008

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The 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.
The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans. Financial crisis 2008
"The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done," the panel wrote in the report's conclusions, which were read by The New York Times. "If we accept this notion, it will happen again."
While the panel, the Financial Crisis Inquiry Commission, accuses several financial institutions of greed, ineptitude or both, some of its gravest conclusions concern government failings, with embarrassing implications for both parties. But the panel was itself divided along partisan lines, which could blunt the impact of its findings. Financial crisis 2008
Many of the conclusions have been widely described, but the synthesis of interviews, documents and testimony, along with its government imprimatur, give the report — to be released on Thursday as a 576-page book — a conclusive sweep and authority.
The commission held 19 days of hearings and interviews with more than 700 witnesses; it has pledged to release a trove of transcripts and other raw material online.
Of the 10 commission members, the six appointed by Democrats endorsed the final report. Three Republican members have prepared a dissent focusing on a narrower set of causes; a fourth Republican, Peter J. Wallison, has his own dissent, calling policies to promote homeownership the major culprit. The panel was hobbled repeatedly by internal divisions and staff turnover.
The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke, who did not foresee the crisis but played a crucial role in the response. It criticizes Mr. Greenspan for advocating deregulation and cites a "pivotal failure to stem the flow of toxic mortgages" under his leadership as a "prime example" of negligence.
Like Mr. Bernanke, Mr. Bush'sTreasury secretary, Henry M. Paulson Jr., predicted in 2007 — wrongly, it turned out — that the subprime collapse would be contained, the report notes.
Democrats also come under fire. The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton's term, is called "a key turning point in the march toward the financial crisis 2008."
Former and current officials named in the report, as well as financial institutions, declined Tuesday to comment before the report was released.
The report could reignite debate over the influence of Wall Street; it says regulators "lacked the political will" to scrutinize and hold accountable the institutions they were supposed to oversee. The financial industry spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with it made more than $1 billion in campaign contributions.
The report does knock down — at least partly — several early theories for the financial crisis. It says the low interest rates brought about by the Fed after the 2001 recession; Fannie Mae and Freddie Mac, the mortgage finance giants; and the "aggressive homeownership goals" set by the government as part of a "philosophy of opportunity" were not major culprits.
"The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire," the report states. "The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble." Financial crisis 2008
The report's implications may be felt more in the political realm than in public policy. The Dodd-Frank law overhauling the regulation of Wall Street, signed in July, took as its premise the same regulatory deficiencies cited by the commission. But the report is sure to be a factor in the debate over the future of Fannie and Freddie, which have been run by the government since 2008.
Though the report documents questionable practices by mortgage lenders and careless betting by banks, one striking finding is its portrayal of incompetence.
Financial crisis 2008 us financial crisis,us economy,economic news,financial crisis 2008,2008 financial crisis,subprime crisis,economic depression,american economy,subprime mortgage crisis,s 2008

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

Introduction to the Financial Crisis Inquiry Commission

The FinancialCrisisInquiryCommission is a bipartisan commission that has been given a critical non-partisan mission — to examine the causes of the financial crisis that has gripped the country and to report our findings to the Congress, the President, and the American people.
Hopefully, the Commission's work can help rebuild the American people's belief in a financial system that puts Americans to work, fulfills their goals and provides the foundation for a new era of broadly shared prosperity.

Heated exchange as CEO of investment bank testifies, protest

(28 Apr 2010)
TRUEDATE CREATED = 28-04-2010
1. Goldman SachsCEOLloyd Blankfein being sworn in for testimony at a Capitol Hill hearing, push in to Senator Carl Levin
2. Wide shot of Senate panel
3. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"The people who were coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market, and that''s what they got. The unfortunate thing, and it''s unfortunate but it doesn''t, is that the housing market went south very quickly after some of these securities, not all of them because some of them were done early, but they went. And so people lost money in it, but the security itself delivered the specific exposure that the client wanted to have."
4. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You don''t believe it''s relevant to a customer of yours that you are selling a security to that you are betting against that same security. You just don''t think it''s relevant and needs to be disclosed. Is that the bottom line?"
5. SOUNDBITE: (English) Lloyd Blankfein, Goldman Sachs CEO:
"Yes, and the people who are selling it in our firm wouldn''t even know what the firm''s position is."
6. Blankfein sitting before Senate panel
7. SOUNDBITE: (English) Senator Carl Levin, Subcommittee Chairman of Homeland Security Committee:
"You are taking a position against the very security that you are selling and you are not troubled?"
Blankfein: "Senator, again."
Levin: "And you want people to believe to trust you?"
Blankfein: "Senator I think people do trust us."
Levin: "Why, I wouldn''t trust you. If you came to me and wanted to sell me securities and you didn''t tell me that you have a bet against that same security, you don''t think that affects my thinking?"
8. Wide shot of protesters in prison uniforms with Goldman officials'' names around their necks
9. SOUNDBITE: (English) Senator Claire McCaksill, Homeland Security Committee: ++starts on pan of witnesses++
"We have spent a lot of time going through all these documents, and let me just explain in very simple terms what synthetic CDOs are. They are instruments that are created so that people can bet on them. It''s the la-la-land of ledger entries. It''s not investment in a business that has a good idea. It''s not assisting local governments and building infrastructure. It''s gambling, pure and simple, raw gambling."
10. Witnesses seated at table
11. SOUNDBITE: (English) Michael Swenson, Managing Director, Structured Products Group Trading, Goldman Sachs:
"We did not cause the financial crisis, specifically to the mortgage desk, which is what I''m here to speak about. You have two panels in subsequent meetings to speak about that, about the Goldman Sachs and our businesses. We, I do no think that we did anything wrong."
12. Mid shot of clerk taking notes
STORYLINE:
Defending his company under blistering criticism, the CEO of Goldman Sachs testily told sceptical US senators on Tuesday that customers who bought securities from the Wall Street giant in the run-up to a national financial crisis came looking for risk.
Lloyd Blankfein and other Goldman executives were lambasted by lawmakers for "unbridled greed" in an often-electric daylong showdown between Wall Street and Congress - with expletives frequently undeleted.
Unrepentant, five present and two past Goldman officials unflinchingly stood by their conduct before a Senate investigatory panel and denied helping to cause the financial near-meltdown that turned into the worst recession since the Great Depression.
"Unfortunately, the housing market went south very quickly," Blankfein told sceptical senators. "So people lost money in it."
You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b26ad6044e5469084381560537c68384
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3:56

Govt. Inquiry: Financial Crisis Was Avoidable

From the New York Times: According to the conclusions of a federal inquiry, the 2008 finan...

Govt. Inquiry: Financial Crisis Was Avoidable

From the New York Times: According to the conclusions of a federal inquiry, the 2008 financial crisis was an "avoidable" disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Elizabeth Warren Destroys Janet Yellen Over JPMor…: http://youtu.be/XYtSMLgaW6U Americans have learned a lot in recent years about how our largest financial institutions make their money. But few would have imagined that a million and a half tons of aluminum -- a quarter of the national supply at any given moment -- typically sits in a network of 27 Detroit warehouses owned by Goldman Sachs. And hardly anyone would have thought that manufacturers seeking to purchase that aluminum might wait 18 months or more for delivery, while warehouse owners like Goldman Sachs collect additional rent, paid for by consumers of aluminum products ranging from beer cans to home siding. http://www.thesoapboxroadshow.com/ WASHINGTON - Concluding a two-year bipartisan investigation, Senator Carl Levin, D-Mich., and Senator Tom CoburnM.D., R-Okla., Chairman and Ranking Republican on the Senate Permanent Subcommittee on Investigations, today released a 635-page final report (PDF, 6MB) on their inquiry into key causes of the financial crisis. The report catalogs conflicts of interest, heedless risk-taking and failures of federal oversight that helped push the country into the deepest recession since the Great Depression.
http://levin.senate.gov/imo/media/doc/supporting/2011/PSI_WallStreetCrisis_041311.pdf

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2)

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

Financial Crisis Inquiry Commission Report - 1/3

Financial Crisis Inquiry Commission (FCIC) Report
Angelides: "PeopleWant To Know How This Happened and Why It Happened."
February 11, 2011 • 12:44 PM
In his second interview with WNYC's Brian Lehrer, cut short because of breaking developments in Egypt, FCIC head Phil Angelides continued to promote circulation of the FCIC's Final Report (which continues to get scant coverage in the media), and called for more aggressive federal action to deal with the continuing foreclosure crisis.
Asked about the coming second wave of foreclosures, Angelides said that what's driving this is the high level of prolonged unemployment, and also the inability of homeowners to modify their mortgages. The complex securitization process makes it very hard to unwind these mortgages and establish ownership, Angelides said, adding, "we've created a very tangled web."
Saying that more aggressive federal action is needed, Angelides pointed out that in the 1930s, Franklin Roosevelt created a home-ownership assistance program, under which thousands of federal agents were sent out to help people negotiate with their banks.
Angelides again urged people to go to the website, download the report, or purchase it from Public Affairs press or the GPO.
"This is an important story: of what happened to this country, how we came to the verge of financial collapse, and hopefully there will be lessons learned here, so we do not repeat this... I think it shows there's a tremendous hunger in this country still -- anger, confusion, about what it is that brought us to the point where 4 million families have lost their homes, and 13 million families may; $11 trillion in life savings were wiped away, and 26 million of our fellow Americans are out of work. People want to know how this happened and why it happened."

1:17:28

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets.[118] As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[120] In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies,[121] which turned out to be adequate to what actually happened in 2006–2008.[citation needed]
Martin Wolf further wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself – was to find a way round regulation."
http://en.wikipedia.org/wiki/Financial_collapse_of_2007%E2%80%932008

1:17:28

PANEL: The Financial Crisis Inquiry Commission Report: Five Years Later

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2)

2008 Financial Crisis and Fannie Mai, Day 3 (Part 2 of 2) - mars-1a:hrs01E_C2123_100409.2 - Rayburn 2123 - Committee on Energy and Commerce - 2010-04-09 - Financial Crisis Inquiry Commission. ReportVideo Issue Financial Crisis Inquiry Commission. In the third of three days of hearings held by the bipartisan Financial Crisis Inquiry Commission (FCIC), former Fannie Mae executives Robert Levin and Daniel Mudd testified in the role of their company in the housing market collapse. They faulted Fannie Mae's backing of riskier mortgages on pressures related to increased competition from Wall Street firms and the goal of increasing home ownership. Mr. Mudd in his testimony did not apologize for his company's collapse but stated, "I accept responsibility for everything that happened on my watch." Congress formed the ten-member FCIC in May 2009 to examine the causes of the financial markets meltdown. Description from C-SPAN.

Peter Wallison's Dissent from the Majority Report of the Financial Crisis Inquiry Commission

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A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings. More on Buffett: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=22f3a19f1003df6e04ad734879f32fb7&camp=1789&creative=9325&index=books&keywords=warren%20buffett
In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued.
The value of such security ratings has been widely questioned after the 2007--09 financial crisis. In 2003, the U.S.Securities and Exchange Commission submitted a report to Congress detailing plans to launch an investigation into the anti-competitive practices of credit rating agencies and issues including conflicts of interest. More recently, ratings downgrades during the European sovereign debt crisis of 2010--11 have drawn criticism from the EU and individual countries.
A company that issues credit scores for individual credit-worthiness is generally called a credit bureau (US) or consumer credit reporting agency (UK).
Credit rating agencies have been subject to the following criticisms:
Credit rating agencies do not downgrade companies promptly enough. For example, Enron's rating remained at investment grade four days before the company went bankrupt, despite the fact that credit rating agencies had been aware of the company's problems for months. Or, for example, Moody's gave Freddie Mac's preferred stock the top rating until Warren Buffett talked about Freddie on CNBC and on the next day Moody's downgraded Freddie to one tick above junk bonds. Some empirical studies have documented that yield spreads of corporate bonds start to expand as credit quality deteriorates but before a rating downgrade, implying that the market often leads a downgrade and questioning the informational value of credit ratings. This has led to suggestions that, rather than rely on CRA ratings in financial regulation, financial regulators should instead require banks, broker-dealers and insurance firms (among others) to use credit spreads when calculating the risk in their portfolio.
Large corporate rating agencies have been criticized for having too familiar a relationship with company management, possibly opening themselves to undue influence or the vulnerability of being misled. These agencies meet frequently in person with the management of many companies, and advise on actions the company should take to maintain a certain rating. Furthermore, because information about ratings changes from the larger CRAs can spread so quickly (by word of mouth, email, etc.), the larger CRAs charge debt issuers, rather than investors, for their ratings. This has led to accusations that these CRAs are plagued by conflicts of interest that might inhibit them from providing accurate and honest ratings. At the same time, more generally, the largest agencies (Moody's and Standard & Poor's) are often seen as promoting a narrow-minded focus on credit ratings, possibly at the expense of employees, the environment, or long-term research and development. These accusations are not entirely consistent: on one hand, the larger CRAs are accused of being too cozy with the companies they rate, and on the other hand they are accused of being too focused on a company's "bottom line" and unwilling to listen to a company's explanations for its actions.
While often accused of being too close to company management of their existing clients, CRAs have also been accused of engaging in heavy-handed "blackmail" tactics in order to solicit business from new clients, and lowering ratings for those firms . For instance, Moody's published an "unsolicited" rating of Hannover Re, with a subsequent letter to the insurance firm indicating that "it looked forward to the day Hannover would be willing to pay". When Hannover management refused, Moody's continued to give Hannover Re ratings, which were downgraded over successive years, all while making payment requests that the insurer rebuffed. In 2004, Moody's cut Hannover's debt to junk status, and even though the insurer's other rating agencies gave it strong marks, shareholders were shocked by the downgrade and Hannover lost $175 million USD in market capitalization.
http://en.wikipedia.org/wiki/Credit_rating_agency

2:22:13

Warren Buffett on Financial Audits, Corporate Boards, and U.S. Business Regulation (2007)

In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 h...

Warren Buffett on Financial Audits, Corporate Boards, and U.S. Business Regulation (2007)

In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership. Buffett invested in and eventually took control of a textile manufacturing firm, Berkshire Hathaway. In 1962, Warren Buffett began buying shares in Berkshire from Seabury Stanton, the owner, whom he later fired. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chace, to run the company. In 1966, Buffett closed the partnership to new money. He would go on to claim that the textile business had been his worst trade.[29] He then moved the business into the insurance sector, and in 1985 the last of the mills that had been the core business of Berkshire Hathaway was sold. Buffett wrote in his letter: "... unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL."
In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its first and only dividend of 10 cents. In 1969, following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters to shareholders. However, he lived solely on his salary of $50,000 per year, and his outside investment income. In 1979, Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
In 1973, Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors. In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were brought. In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost money, until the Courier-Express folded in 1982.
In 1979, Berkshire began to acquire stock in ABC. Capital Cities announced $3.5 billion purchase of ABC on March 18, 1985 surprised the media industry, as ABC was four times bigger than Capital Cities at the time. Berkshire Hathaway chairman Warren Buffett helped finance the deal in return for a 25% stake in the combined company.[30] The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Also, the two companies owned several radio stations in the same markets.[31]
In 1987, Berkshire Hathaway purchased a 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director. In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991.[32] Buffett became Chairman of Salomon until the crisis passed; on September 4, 1991, he testified before Congress.[33]
In 1988, Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7% of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which it still holds.
http://en.wikipedia.org/wiki/Warren_Buffett

The financial crisis of 2007--2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008--2012 global recession and contributing to the European sovereign-debt crisis. The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity".
The bursting of the U.S. housing bubble, which peaked in 2006,[5] caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[6][7] The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[8][9][10][11] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[12] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion and institutional bailouts. In theU.S., Congress passed the American Recovery and Reinvestment Act of 2009.
Many causes for the financial crisis have been suggested, with varying weight assigned by experts.[13] The U.S.Senate's Levin--Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The FinancialCrisisInquiryCommission concluded that the financial crisis was avoidable and was caused by "widespread failures in financial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "systemic breakdown in accountability and ethics," "collapsing mortgage-lending standards and the mortgage securitization pipeline," deregulation of over-the-counter derivatives, especially credit default swaps, and "the failures of credit rating agencies" to correctly price risk.[15] The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States.[16] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st-century financial markets.[17] Research into the causes of the financial crisis has also focused on the role of interest rate spreads.[18]
In the immediate aftermath of the financial crisis palliative fiscal and monetary policies were adopted to lessen the shock to the economy.[19] In July 2010, the Dodd--Frank regulatory reforms were enacted to lessen the chance of a recurrence.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308